After the Central Bank’s decision to raise the base price by 75 points
Banks intend to postpone raising the "interest" by two weeks... and deposits are the biggest beneficiary
The Central Bank raised interest rates at the same rate that the Federal Reserve raised due to the policy of linking the dirham to the dollar.
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Ahmed Arafat: "Banks leave a margin to mitigate the negative effects on demand, which is represented in submitting offers on administrative fees or insurance fees."
The return on deposits is expected to range between 3.25 and 4%.
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Banks operating in the country intend to postpone raising the interest rate on loans and various financings for a period of two weeks, in order to complete all transactions and pending requests on their systems under the procedure, according to information collected by "Emirates Today".
The central bank raised the basic interest rate by 75 basis points on Wednesday evening, coinciding with a similar hike by the US Federal Reserve, to control inflation, which recorded its highest level in the last four decades at 8.2%.
The UAE Central Bank's interest rate hike by the Federal Reserve comes due to the policy of linking the dirham to the dollar.
The beneficiary of the largest
The banking expert, Ahmed Arafat, said that the banks are waiting to raise the interest rate on personal, real estate and other finances, for a period of two weeks at most, after which it will increase by 1 to 1.25% as of November 19.
He added to "Emirates Today" that this period is a deadline for completing transactions and requests "under procedure", and for taking approvals, that is, requests that have already been submitted at the current prices before lifting.
Arafat stressed that the biggest beneficiary of raising the "base rate" is bank deposits, on which the return is expected to revolve between 3.25 and 4%, which is a very high return, and is considered the largest during the past 10 years.
He explained that this return would encourage more financial flows towards banks, as deposits, at all times.
real estate finance
And he continued, "As for the real estate financing installments, it is expected to rise, because of its direct link to the EIBOR price (the rate of lending between banks) up and down, which means that the higher the main base rate, the higher the interest rate on the real estate finance by approximately the same."
He pointed out that all banks will raise the percentage, but there is a margin left to mitigate the negative effects on demand, represented in submitting offers on administrative fees, insurance fees and others.
It is noteworthy that the US Federal Reserve's Open Market Committee decided last Wednesday to raise the federal funds interest rate by 75 basis points, to reach a range between 3.75 and 4%, the highest level since early 2008.
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